Second-step merger

A hybrid method of acquiring a company by combining a tender offer with a merger.

A hybrid method of acquiring a company by combining a tender offer with a merger.

 

A hybrid method of acquiring a company by combining a tender offer with a merger.

In the first step, the buyer initiates a tender offer to acquire a majority of the outstanding target company’s stock.

In the second step, the buyer completes a back-end merger to acquire the balance of the target company’s stock.

Usually, the consent of stockholders representing a majority of the remaining shares (which the buyer holds after the tender offer) is necessary to accomplish the back-end merger and acquire the target company.

If at least 90% of the target company’s stock is acquired in the tender offer, the acquirer can effect a short form merger and squeeze out remaining stockholders.

 

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